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SYDNEY: The Australian and New Zealand dollars rose slightly on Tuesday after wilting in the face of concerns about China’s prospects under new party leaders, while traders awaited the first budget from Australia’s Labour government later in the day.

The Aussie rose 0.2% to $0.6326, after plunging 1% overnight to as low as $0.6270.

Resistance is now around 64 cents and support is around 62 cents.

The kiwi dollar was up 0.4% to $0.5715, having also dropped 1% to as low as $0.5655.

It is still some distance off the recent low of $0.5510, supported by hawkish comments from the Reserve Bank of New Zealand in its fight against inflation.

The Antipodeans have taken a beating this year amid persistent worries about global growth and heightened market volatility.

They also serve as a liquid proxy for the Chinese yuan which hit a fresh low in nearly 15 years on Tuesday.

Investors also dumped Chinese shares, with Hong Kong’s Hang Seng index sliding to 13-year lows, after President Xi Jinping’s newly unveiled leadership team heightened fears that economic growth will be sacrificed for ideology-driven policies.

For now, the market’s attention has shifted to the Australian Labour government’s first budget, which will be delivered later on Tuesday. Officials have said spending will focus on easing the cost-of-living crisis without lighting a fire under already high inflation.

Australia, NZ dollars fail to sustain rally, China concerns mount

“The immediate focus is on the Australian budget where strong commodity prices have cut estimates for the FY2023 deficit in half to A$36.9 billion, a fiscally positive backdrop for the Aussie dollar,” said analysts at ANZ in a note to clients.

Australian third quarter consumer price index data, due out on Thursday, could be key as well, they said. Annual inflation in the country likely accelerated to 7% in the third quarter, up from 6.1%, according to a Reuters poll.

Financial markets have all but priced in another quarter-point hike from the Reserve Bank of Australia in November, and cash rates are expected to peak around 4.3%.

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